How Apple and Amazon Will Shape Mobile Payments

Apple and Amazon will continue to drive customer expectations and create big shifts in the retail world even if they don’t release a mobile payments solution.

Many traditional payments players like banks have been worried for a while about the possibility of Apple entering the mobile payments space at hte point of sale. Many speculated that the last iPhone release would include an NFC chip, which did not happen to the relief of those who would have to compete with Apple. Although Apple already has a bridgehead into the payments business thanks to iTunes, experts seem to think Apple will refrain from entering the mobile payments business.

“If they [Apple] want to move on mobile payments they will have to face fraud issues and acquiring issues. Things like how you do chargebacks. We think it would be hard for Apple to do that,” Dan Schatt, the head of financial innovations for PayPal, said at a panel discussion at NACHA Payments today in San Diego, Cal.

The panelists all agreed that it would be difficult for Apple to move into a space like payments that it doesn’t specialize in. “Many big technology companies have lot of payments info, but their core competency is elsewhere,” Jennifer Schulz, the head of global e-commerce for Visa, explained.

But even if Apple doesn’t enter the mobile payments space, it will still have an effect on how that space plays out, Schulz insisted. Apple is at the forefront of innovating in customer experience with mobile devices, and for any mobile payments solution to take off it will have to take that into account. “We will have to integrate seamlessly with them [and their devices],” Schulz said. “They won’t compromise their user experience to integrate with us.”

As much as Apple remains a threat to banks if it offers a mobile payments solution, Amazon could be just as big of a threat. The huge online retailer applied last week for a patent for a mobile payments solution. Whatever happens with that solution, the company will continue to drive interest in mobile payments from retailers who are losing to ground to Amazon, PayPal’s Dan Schatt said.

Schatt predicted that the winner in the mobile payments race will be a solution that helps retailers compete with Amazon. “A lot of brick-and-mortar retailers are getting killed by Amazon; 80% of consumers’ buying decisions are influenced by info that they see online today,” Schatt explained. Customers are simply better educated today because of the information they can see about products online that they could never get in a store location, Schatt said. In order for a mobile payments solution to really take off at the point of sale, Schatt suggested, it will have to be able to provide customers with the same amount of information about the product they’re buying as they can get online when shopping on Amazon.

Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio

Interesting points about core competencies vs. expectation-setting. Financial services definitely has a self-interest in creating a more modern customer experience like the "A" tech companies mentioned, but you can't take all your cues from outside the industry.